TaxTMI 
TaxTMI 
2017 (11) TMI 1235
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....d i.e. the same be restricted to Rs. 29,265/- as computed by the Appellant. Ground II: Lew of Interest 1. On the facts and circumstances of the case and in law, the Ld. AO erred in levying interest u/s. 234C of the Act. 2. The Appellant prays that levy of interest u/s. 234C of the Act to be deleted. Ground III: General The Appellant craves leave to add to, alter and/ or amend all or any of the foregoing grounds of appeal." Assessment Year 2011-2012: Ground I: Disallowance u/s 14A r.w. Rule 8D of the Income Tax Rules, 1962 ("the Rules") of Rs. S.55.676/-; 1. On the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) - 14, Mumbai ["the CIT(A}"] erred in upholding the action of the Additional Commissioner of Income, Range 6(1), Mumbai ["the AO"] in disallowing the expenditure amounting to Rs. 8,55,676/- u/s. 14A of the Act, being the expenses incurred towards earning exempt income, computed as per Rule 8D of the Rules. 2. The Appellant prays that disallowance of Rs. 8,55,676/- be deleted i.e. the same be restricted to Rs. 30,803/-, as computed by the Appellant Ground II: Lew of Interest c1 1. On the facts and circum....
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.... expenditure in regard to exempt income for the purpose of disallowance under section 14A. 6.15 If one reads subsection (3) along with subsection (2), it simply means that in a case where the assessee claims that no expenditure has been incurred in respect of the exempt income, the AO shall determine the amount of expenditure incurred in relation to such income : in accordance with the method as may be prescribed in view of the provisions of subsection (2). Therefore, since from assessment year 2008-09, rule 8D is applicable, the AO shall be free to compute the disallowance of expenditure as per this rule in respect of the exempt income in all such cases where the assessee claims that no expenditure has been incurred in respect of the said income and no suo motto disallowance of expenditure has been made by the assessee. This is quite logical as well, because it cannot be the case of any investor that he has not incurred even a single penny for making such investment and earning of exempt income there-from. This is exactly the case of the appellant, where accounts are kept on a mixed fund basis, and for the purpose of investment in shares, mutual funds etc, separate accounts hav....
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....w.e.f. A.Y. 2008-09. The Hon'ble High Court has held as under, in this regard: 6.17 Hence, without prejudice to the decision of Hon'ble ITAT in the Appellant's own case in the A.Y. 2004-05 to 2009-10, which are not governed by Rule 8D, and in view of the above observations of Hon'ble High Court, I hold that in view of the facts of the case of the appellant, where it has claimed that absolutely no amount of expenditure had been incurred for earning of the exempt income and where no such expenditure was disallowed suo-moto, the AO had no choice but to compute the disallowance u/s. 14A as per the method prescribed by Rule 8D. Therefore, the AO's action is upheld. 6.18 The appellant has made a without prejudice claim that if any disallowance is sustained, then the amount of disallowance should be allowed to be capitalized along with the cost of investments. In regard to this claim, a number of case laws have been cited. / have considered this claim of the appellant vis-a-vis the case laws cited in this regard. I however do not agree with the appellant because what is being disallowed is a part of the claim of expenditure debited in the P&L account on a proportiona....
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....de by the Appellant: Equity Shares of Hindustan Oil Exploration Company (AY 2007-08) - Rs. 38 Lakhs - the Appellant relies on the following case laws wherein it was held that where own funds arc substantially higher than the tax-free investments, a presumption lies that the tax-free investments have been made out of own funds and not borrowed funds Equity Shares of Hindustan Oil Exploration Company Ltd. (AY 2008-09) - Rs. 156 Lakhs - there is a live nexus between the amount of fixed deposit matured and the amount of investment made In the Appellant's own case for A.Y. 2008-09 (ITA No. 4053, 4160/Mum/2012) In the Appellant's own case for A.Y. 2009-10 (ITA No. 3227/Mum/2013) wherein the Tribunal has upheld the order of the CIT(A) and decided the issue in favour of the Department. Against the said order, the Appellant has filed a Miscellaneous Application ("MA") dated June 30. 2016. The Appellant most humbly submits that the Tribunal, while deciding the issue has not considered the binding decisions of Jurisdictional High Court and other Tribunal orders including those in the Applicant's Civil case. The said MA is pending disposal. . I CIT v. Reliance Utilities & Power Lim....